TurboTax TaxCaster 2019 Review With Future 2020 Forecast
The all new freshly updated TurboTax TaxCaster is ripe and ready to calculate your 2019 earned income tax liability, and by gosh by golly it can forecast your 2020 tax liability as well, how cool is that?
Our new review of the updated 2019 TurboTax TaxCaster begins with an introduction into using this tax calculator app, and it includes some Hot Tips on how to get the most out of this tax time tool.
Today I noticed that TurboTax has updated their free TaxCaster Tax Calculator to account for the new tax law changes that have been put into place for the 2019 - 2020 tax season.
I’d like to also encourage every taxpayer to spend a few minutes forecasting their new tax liability for 2020 as well, since this can be done based on the new tax laws. This is a great way to get a heads up on future tax liability as well as encourage good tax planning practices.
So without further ado, lets get right to it!
TurboTax TaxCaster Introduction
To start with the first screen on TaxCaster is the My-Info screen and since this is pretty self explanatory we will trust that you can answer those questions easily and we will focus on the Income Screen entries to begin our TurboTax TaxCaster Guide.
As the first question posed what are your total taxable wages you have to wonder what are none taxable wages? Well, Non-taxable wages are wages an employee or individual receives without any taxes being withheld. However, most wages paid are taxable. So when are wages non-taxable? The IRS definition of a non-taxable wage and tax-exempt income is quite narrow.
TurboTax TaxCaster Non-Taxable Income Tips
Non-taxable wages may include:
Disability wages: employees declared temporarily or permanently disabled may be eligible for disability pay. Disability wages generally qualify as non-taxable income. However, disability payments from insurance policy premiums paid employers are taxable. Compensatory damages awarded for injury, sickness, or loss of function may be non taxable. Many disability payments are non taxable including after-tax funded supplemental disability insurance, private disability insurance, and worker’s compensation.
Gifts: gift taxes are generally paid by the giver, not by the recipient. Individuals can gift others fairly large amounts of money without paying taxes on it, however, employers can only give non-taxable gifts of $25 or less. Bonuses and profit-sharing payments are not considered gifts.
Insurance provided by employers: employer paid employee’s insurance payments (of any type) are not considered a part of the employee’s income and therefore non-taxable. Employer payments toward their own health savings account are also non-taxable.
Life insurance payouts: life insurance payouts due to someone’s death may not be taxed, excluding policy cash-out funds greater than the cost of the policy.
Partnership income: Partnership income is generally non-taxable. See IRS 541 for explanations explains
Scholarships and financial aid: employer provided educational assistance to an employee is non-taxable up to $5,250 a year. Scholarships, financial aid, work/study job assignments, and payments through universities while studying are often non-taxable, however it depends on how the money is used.
- If the money is used to pay tuition, fees, course materials, or textbooks, it is non-taxable
- If it is used to pay for room and board or if it's paid directly to the student to use as desired, it is taxable
Welfare benefits: wages and other income received through welfare programs including
food stamps and other assistance are non taxable.
More sources of non-taxable income include bequests and inheritances; cash rebates from a dealer or manufacturer for items you buy; child support payments; damage awards for physical injury or sickness; gifts and reimbursements for qualified adoption expenses, and welfare benefits.
The remainder of the questions on the income screen include common entries for employee paycheck withholdings, unemployment income, self employed income, stock sales, interest and dividend income, and other income.
TurboTax TaxCaster Tax Breaks Tips
Tax breaks are government offerings for a reduction in your taxes. Tax breaks can come in a variety of forms, such as claiming deductions, taking advantage of credits, or excluding income from your tax return. Tax credits are more beneficial than tax deductions since they are applied directly to reduce your gross income (instead of lowering your taxable income like deductions).
Homeowner Tax Breaks
- Mortgage Interest and Points Deduction: interest and points you pay on your mortgage are tax-deductible.
- Casualty Losses Affecting Your Home: losses due to theft, vandalism, or Mother Nature’s wrath
- Energy-Efficiency Home Improvements: IRS Energy Star or EPA standards improvements often qualify for tax credits.
- Property Tax Deduction: money you pay for property taxes to the local and state government can be deducted on your tax return, along with sales tax. For 2019 this is now limited to $10,000.
Tax Breaks for Taxpayers over 50
When your 50, and especially after age 65, you qualify for extra tax breaks. Taxpayers over 50 can also defer or avoid taxes by investing in retirement and health savings accounts.
- 401(k) catch-up contributions: Taxpayers 50 and older can defer paying income tax on $6,000 more than younger workers
- Additional IRA deduction: Workers age 50 and older can contribute an additional $1,000 to an IRA
- Bigger standard deduction: You can claim a larger standard deduction if you or your spouse is age 65 or older
- Credit for the elderly or disabled: If you're 65 or older with low income using form 1040 or 1040A, you could be eligible for a tax credit
- Higher HSA contribution limit: Individuals age 55 or older by year end are eligible to contribute $1,000 more than younger taxpayers.
Student Loan Interest Deduction:
- Taxpayers can take a tax deduction for interest paid on student loans for yourself, your spouse, or a dependent. This benefit applies to all loans used to pay for higher education expenses.
Charitable Contribution Deduction:
- Charitable contributions to qualified organizations are tax deductible. This includes donations, mileage driven, contributions of cash or property.
TaxCaster wraps it up with the review screen where you get an oversight of the information you provided, and a tally of how it added up to display your existing income tax obligation to Uncle Sam. Hopefully in your case - he owes you!
The TurboTax TaxCaster can help tax payers as a year round tool you can use to keep track of all your 2019 financial changes throughout the year. Plus, now TaxCaster can forecast your 2020 tax liability using new tax laws and past year income analysis.
It's a great financial tool to have in your arsenal that in fact becomes a beneficial tax planning app for the future. Simply punch in different scenarios to see how they effect your taxes, it's that simple!
try it today!